Transcript
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Ralph: Have you ever been standing
at the edge of something huge?
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a, change, you know, is coming.
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But you're dreading it.
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that's how many people feel when
facing the prospect of divorce?
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Your heart is breaking.
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And on top of that, you're staring down
the barrel of financial uncertainty.
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What happens to your home?
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Your savings.
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Your entire way of living
shifts beneath you.
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On this episode of the Ask Ralph
podcast, we're getting real.
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We're going to delve deep into the
financial and tax side of divorce
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with a Christian perspective.
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Listen folks.
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My goal is to offer both guidance
and hope through what feels
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like an impossible situation.
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So let's get started.
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The truth is I think we need to start
by acknowledging the challenges.
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Divorce is a gut-wrenching process.
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Something I don't recommend highly, but
at sometimes the reality can't be avoided.
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It just is what it is.
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Beyond the personal heartache, there's
a swirling financial hurricane.
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Maybe you're facing a
battle over the house.
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It's not just a structure.
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These walls, hold memories.
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They're huge for that.
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But can you realistically ? Keep
it without your ex's income.
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Will you be trapped if you do.
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Well, let's talk about that specifically.
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I've come up with really
four main options to that.
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And option one is pretty simple.
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Sell the home and split the proceeds.
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This is really the cleanest solution.
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Especially when emotions are running high.
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Truth.
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Is it severs financial ties.
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It's a clean break.
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As it relates to the home, but
it carries these considerations.
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These are things you
absolutely have to think about.
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The housing market.
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Is it a good time to sell?
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You know, a buyer's market means you
might not get the price you hope for.
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You hope you're in a seller's
market, but what if you're not.
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All of this impacts how
the money will be divided.
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You also have to think
about transaction costs.
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Factor in your realtor fees, closing
costs, these eat up the profit.
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you might be in a situation where your
home's not worth enough to even sell it.
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And come out clear when you
look at the closing costs.
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It could be in the other situation
too, with capital gains of the
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home's value, increased significantly
since purchase, you could face
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capital gains taxes on your portion.
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So all the more important to
consult with a tax advisor.
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That really covers option one.
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And that is just simply sell
the home and split the proceeds.
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Option two.
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I've seen this happen many times in my
practice, one spouse buys out the other.
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Yeah, this is a way to
keep the home in a family.
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It's also a huge bonus
if kids are involved.
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But it can be complex.
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So you need to navigate this wisely.
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the thing is you got to start
with that accurate appraisal.
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You can't just pick a number.
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You got to get a professional
appraisal, determine the fair
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market value, of the home.
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And if you're already fighting
about the marriage, Got to make
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sure you do this above board.
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You got to think about
the term called equity.
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Well, what is equity Ralph?
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Well, how to calculate one, spouse's
owes the other subtract the outstanding
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mortgage from the appraised value.
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It's pretty simple.
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the remaining some is what's
owed to the other spouse.
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Who's leaving the home.
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Of course, that sounds good on paper.
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But getting to that can be a challenge.
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you also could refinance the mortgage,
the spouse, keeping the house
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needs to apply for a new mortgage.
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Well, what if their
income doesn't qualify?
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what if their credit's not great, what?
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If this divorce was caused by bad
credit decision, maybe on both parties.
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So they got to qualify.
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So that's why, keeping the house
or one spouse buying out the other
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can sometimes be a challenge.
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Now here's another option.
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I seen this happen too.
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And sometimes this works and
sometimes it's a disaster.
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And that's option three,
continue to co-own.
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I think this is at least common.
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And my friends, it only works in
amicable divorces, which to my
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experience is not very common.
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They might start that way.
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They usually don't end that way.
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and maybe the goal there is to
keep the house for the children
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until they graduate from school.
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And I've seen it work.
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I've also seen it become a disaster.
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So, what are some risks
involved with that?
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Well, here's a big risk.
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What if one spouse defaults?
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If the remaining co-owner misses
mortgage payment, it hurts
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the credit of both people.
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you might be counting on that
income from both of you, even
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though you've separated yourself.
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in divorce.
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If one of you can't afford to pay, you're
going to affect both people's credit.
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Another huge thing.
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And I've seen this battle out time
and time again is maintenance,
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disputes, who pays for a new roof.
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If there's a major repair.
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This needs to be laid out crystal
clear in a detailed agreement.
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Not a lot of times.
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It's not.
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And then you just get into, battle
number two or battle number 17.
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It's also really awkward.
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you couldn't make your marriage work.
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What makes you think you're gonna
be able to work together on housing
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matters when emotions are still so raw?
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Now the final option,
this isn't a great one.
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But I've seen this play out as
well with some of my clients and
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that's a for sale by the court.
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truth is if both parties
are uncooperative, the judge
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might order, the house sold.
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Often on an accelerated timeline
is not great for you financially.
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Oftentimes, this usually means
getting lower than market value
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in is the least desirable option.
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So those are really the big
four things I think you can do.
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When you've got the joint home, you can.
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Sell it.
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Cut your ties.
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You can.
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One spouse buy out the
other networks sometimes.
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continue to co-own it and figure out
that, in some kind of written agreement,
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or you can let the judge do it.
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And I don't know that's
the best option either.
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So here's some other things to
consider things you might not
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have thought about children.
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if one spouse has primary custody,
keeping the home for their
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stability might be the priority.
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But you got to think
about that financially.
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is that a realistic decision?
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And then if you're going to stay
in the home together, or are
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you going to own it together?
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how are you going to deal with
those marital versus separate funds?
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If one person came into the marriage
already owning the home, Or made the
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down payment with premarital money that
can influence the division of assets.
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So this is where you got to enlist a team.
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get a lawyer and accountant,
that sort of thing.
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and don't dismiss.
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The emotional attachment the house
is more than just walls and windows.
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I remember when I was a kid, my parents
split up when I was about eight.
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It was such a difficult
time to go through.
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And to be honest with you,
my dad left, my mom stayed.
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we stayed in our, youth home in, which was
great because to me that was reassurance.
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But, it was one of those situations
where, I wasn't involved.
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I was eight years old, so I didn't know
what was going on behind the scenes,
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but, look looking at it when I got
older, I guess my dad kind of did the
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right thing, kept my mom in a home.
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So that my sister and I could
have some stability there.
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those are tough things.
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So let's talk about some action steps
you can do, when you're looking at,
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how are you going to handle the house?
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Number one thing.
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Action.
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Step, get an appraisal.
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No matter which path you pick of
the four things I talked about.
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You got to get an objective
appraisal because that's going to be
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something that you're going to need.
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It's going to help prevent arguments.
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Another thing.
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I'm going to tell you
to do another action.
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that is vital consult professionals.
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Don't do this alone.
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I've seen clients try to do a divorce on
their own, and it turns into a disaster.
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A divorce lawyer and a financial
advisor, a tax specialist like
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myself, both familiar with the
complexities are essential.
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Don't think you're going to
get away without doing this.
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It's critically important.
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Another thing, biblically, as a
Christian, we need to prioritize honesty.
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You can't try to hide assets
or downplay the home's value.
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It's going to backfire you on a long run.
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My experience has been.
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Couples who make this work for
their children or for themselves
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are honest with each other.
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listen, the marriage didn't work.
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Who knows why.
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It doesn't even matter
about blame at this point.
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But be honest about where you are and
you got to have those hard conversations.
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And this is one of the
biggest action steps.
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If kids are involved.
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Have a hard conversation.
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And agreement on how
to explain the changes.
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to them is critical,
enlist help with that.
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go find some, at your church to
deals with this, or go find a
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counselor that deals with this.
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Cause you're going to be co-parenting now.
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Even if you're not living
under the same roof.
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You've got to address how to handle
these discussions in a healthy way.
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The truth is handling the home is
a huge piece of the divorce puzzle.
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it's about more than finances
is about your future.
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So don't rush this decision out
of fear, anger, seek support.
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Get good counsel and make the choice.
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that allows you to build a solid
foundation for your next chapter.
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Cause you're going to move
on to your next chapter.
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That's the hope here.
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It's going to be a new season.
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So here's some other
things you got to consider.
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You've got to consider alimony
or child support stress.
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these payments can dramatically
alter your entire budget.
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So not only are you thinking about selling
your home, but what about your budget?
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whether you're receiving or
paying alimony or child support.
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There's.
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Uncertainty here and it
amplifies your anxiety.
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There's also tax time.
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terror.
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Gonna talk about that in a few minutes.
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that married, filing jointly is gone.
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And your tax picture
changes significantly.
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You got to brace yourself.
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You gotta be aware.
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You gotta have knowledge,
how that's going to work out.
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Find an expert that advice
is worth its weight in gold.
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And amidst all of the financial
part and the difficulties you're
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wrestling with guilt and shame.
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A lot of time, you may be
carrying spiritual burdens
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on top of everything else.
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You may said, Ralph, I did
everything I could to make this
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marriage work, but it didn't work.
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remember friend God, doesn't condemn
you for you're walking a hard path,
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no matter what the circumstances are.
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He always offers grace
and strength to endure.
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So let's talk about some concrete
actions that you need to do.
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in the midst of the storm, you
got to shift into a strategy mode.
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It's time to move from
overwhelmed to empowered.
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That's the key to that's.
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If you're going to survive and
thrive in this, you got to move
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from being overwhelmed to empowered.
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The first step in that is to
assemble what I call your dream team.
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A divorce attorney.
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You trust is crucial.
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But don't forget the tax side.
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find a tax advisor, a public accountant
who knows the divorce landscape.
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If you're looking for a tax
advisor, you can go to my my website
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at askralphpodcast.com/store.
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And you can book an appoint with
me and let me know how I can help
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you during this difficult process.
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The truth is mistakes here
can cost you big time.
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00:10:43,362 --> 00:10:45,672
Invest in advisors to help you.
247
00:10:46,602 --> 00:10:49,092
Another key thing is
documentation is everything.
248
00:10:49,872 --> 00:10:53,592
You've got to gather your financial
paperwork, like it's your survival kit.
249
00:10:54,672 --> 00:10:57,882
Bank accounts, retirement
plans, debts, proof of property.
250
00:10:57,882 --> 00:10:59,052
This isn't fun.
251
00:10:59,082 --> 00:11:00,582
This is difficult stuff.
252
00:11:00,582 --> 00:11:02,142
This is stuff you don't want to deal with.
253
00:11:03,132 --> 00:11:06,372
But having the details means navigating
this with your eyes wide open.
254
00:11:06,432 --> 00:11:07,422
It got to do that folks.
255
00:11:07,422 --> 00:11:11,142
You've got to have your eyes wide open
during this it's a stressful time.
256
00:11:11,742 --> 00:11:13,692
It's absolutely, probably one
of the most stressful things
257
00:11:13,692 --> 00:11:14,772
you're ever going to go through.
258
00:11:16,092 --> 00:11:18,102
Another action step is
that dreaded new budget.
259
00:11:18,102 --> 00:11:21,372
pretending life will stay the same
is a recipe for disaster and sinking.
260
00:11:21,372 --> 00:11:23,712
You're going to fail
if you don't fix this.
261
00:11:24,402 --> 00:11:26,952
You got to be brutally honest
with yourself about what
262
00:11:26,952 --> 00:11:28,392
you'll live on post divorce.
263
00:11:29,352 --> 00:11:30,252
It's ugly.
264
00:11:30,792 --> 00:11:31,932
Heart-wrenching work.
265
00:11:32,742 --> 00:11:36,762
But it's the cornerstone of good choices
in how to fix your financial situation.
266
00:11:36,762 --> 00:11:37,362
Moving forward.
267
00:11:38,172 --> 00:11:39,882
And this is a really important part.
268
00:11:40,452 --> 00:11:42,942
You've got to guard your
credit, like a fortress.
269
00:11:43,702 --> 00:11:45,412
you got to close those joint accounts.
270
00:11:45,412 --> 00:11:49,492
The moment the decision is made, you
can't assume that the other party is
271
00:11:49,492 --> 00:11:51,292
going to be honest and do the right thing.
272
00:11:51,472 --> 00:11:53,392
Seen this happen so many times.
273
00:11:53,805 --> 00:11:55,155
Monitor your credit report.
274
00:11:55,458 --> 00:11:58,458
I've done many episodes about credit,
how to get a copy of your credit
275
00:11:58,458 --> 00:11:59,808
report, how to fix your credit.
276
00:11:59,808 --> 00:12:01,098
If it's going sideways.
277
00:12:01,698 --> 00:12:04,338
This is the time to really focus on that.
278
00:12:04,388 --> 00:12:05,648
you got to protect your future.
279
00:12:06,668 --> 00:12:07,508
It's just you now.
280
00:12:08,588 --> 00:12:10,208
It all these financial
things are gonna come on.
281
00:12:10,412 --> 00:12:11,612
maybe you have to buy a new home.
282
00:12:11,612 --> 00:12:12,782
Your credit's going to have to be good.
283
00:12:12,782 --> 00:12:13,772
Maybe you have to buy a new car.
284
00:12:13,772 --> 00:12:14,882
Your credit's going to have to be good.
285
00:12:14,882 --> 00:12:16,652
And it's all so very important.
286
00:12:17,882 --> 00:12:20,852
And don't underestimate the
emotional toll of divorce.
287
00:12:21,722 --> 00:12:23,072
Seek out grief counseling.
288
00:12:24,002 --> 00:12:26,462
I firmly believe in
faith supported groups.
289
00:12:27,062 --> 00:12:28,922
these investments in your sanity.
290
00:12:29,732 --> 00:12:31,952
These things are going to help
you make smarter financial
291
00:12:31,952 --> 00:12:33,312
decisions amidst the turmoil.
292
00:12:33,332 --> 00:12:33,902
And trust me.
293
00:12:34,442 --> 00:12:36,902
It's going to feel like a blur
at times I've been through it.
294
00:12:37,378 --> 00:12:40,288
I know many clients and friends have
used a program called divorce care.
295
00:12:40,288 --> 00:12:43,018
So I would highly recommend that
when it's offered in many churches.
296
00:12:43,622 --> 00:12:45,962
Now let's have that tax talk
and stick with me during this.
297
00:12:45,962 --> 00:12:49,352
I know taxes is nobody's favorite
topic, especially not now.
298
00:12:50,612 --> 00:12:51,512
But here's the breakdown.
299
00:12:51,512 --> 00:12:52,922
You need to understand these things.
300
00:12:53,132 --> 00:12:54,872
The first thing we talked
about a few minutes ago is your
301
00:12:54,902 --> 00:12:56,612
filing status has now changed.
302
00:12:57,602 --> 00:13:00,982
You can't file jointly the way it
works is whatever your marital status
303
00:13:00,982 --> 00:13:03,412
is on the last day of the year, you're
considered that for the whole year.
304
00:13:04,192 --> 00:13:08,512
So if your divorce was granted, even
on the last day of December, You're
305
00:13:08,512 --> 00:13:10,192
considered divorce for the whole year.
306
00:13:10,192 --> 00:13:12,262
So you really have two
filing choices at that point.
307
00:13:13,042 --> 00:13:15,952
You can file single or you
can file head of household.
308
00:13:16,462 --> 00:13:18,172
These are really your most likely options.
309
00:13:18,532 --> 00:13:21,202
Again, this is why you need
to talk with a tax advisor.
310
00:13:21,562 --> 00:13:23,272
To get good information.
311
00:13:24,442 --> 00:13:27,442
And really that decision
comes down to whether you have
312
00:13:27,442 --> 00:13:28,762
primary custody of the children.
313
00:13:29,812 --> 00:13:30,982
And let's discuss alimony.
314
00:13:31,822 --> 00:13:33,382
'cause alimony is not what it used to be.
315
00:13:34,252 --> 00:13:36,622
The tax deduction for alimony
has gone in recent years.
316
00:13:36,662 --> 00:13:39,842
it used to be that you could take a
deduction for what you paid an alimony.
317
00:13:40,742 --> 00:13:43,232
And the person you're paying
had to share that as income.
318
00:13:43,762 --> 00:13:45,112
now, that would mean if you're paying it.
319
00:13:45,652 --> 00:13:46,702
It's given you a break.
320
00:13:47,572 --> 00:13:50,752
And if you're receiving it, it was a
bit of a problem because it was income.
321
00:13:51,832 --> 00:13:53,662
Maybe that's unfair, but
you can't do that anymore.
322
00:13:53,662 --> 00:13:54,532
And that's just the reality.
323
00:13:54,532 --> 00:13:55,912
So you got to live in reality folks.
324
00:13:56,258 --> 00:13:59,298
One important component of that is
child support that stayed the same.
325
00:13:59,328 --> 00:14:01,298
This was never considered
deductible for the payer.
326
00:14:02,168 --> 00:14:03,998
And it's not considered,
income a person receive.
327
00:14:04,028 --> 00:14:04,958
And I get this question a lot.
328
00:14:04,958 --> 00:14:06,908
When somebody comes in, they've
just gone through a divorce.
329
00:14:07,658 --> 00:14:09,578
And they say, Ralph, I'm
not getting any alimony.
330
00:14:09,608 --> 00:14:12,788
We kind of split things equal,
but I do get child support
331
00:14:12,788 --> 00:14:16,008
because on the custodial, parent,
do I have to pay tax on that?
332
00:14:16,038 --> 00:14:16,608
Answer's no.
333
00:14:17,328 --> 00:14:20,358
It's not taxable income to you, and it's
not a deduction for those who pay it.
334
00:14:20,898 --> 00:14:22,578
Now let's talk about the
battle over the kids.
335
00:14:22,578 --> 00:14:24,768
Not, I'm not talking about
the emotional battle.
336
00:14:24,768 --> 00:14:26,178
I'm talking about the tax battle.
337
00:14:27,648 --> 00:14:29,988
Unfortunately, I see this play
out every day in my practice.
338
00:14:31,098 --> 00:14:34,068
Who claims the kids is dependent is
hashed out during the divorce proceedings.
339
00:14:34,068 --> 00:14:34,668
Usually.
340
00:14:35,388 --> 00:14:36,288
That sounds good.
341
00:14:36,828 --> 00:14:39,108
But in reality, it never worked,
kind of works out like that.
342
00:14:39,108 --> 00:14:41,598
So you got to get this clearly spelled
out in your separation agreement,
343
00:14:41,598 --> 00:14:43,338
along with any future modifications.
344
00:14:44,328 --> 00:14:46,368
This can avoid nasty surprises later.
345
00:14:46,368 --> 00:14:48,288
And unfortunately I see these routinely.
346
00:14:49,338 --> 00:14:52,038
I see these battles all the
time and they get really ugly.
347
00:14:52,578 --> 00:14:54,438
So make sure you document everything.
348
00:14:55,548 --> 00:14:58,398
So let's talk about that battle over
the kids in a little bit more detail.
349
00:14:58,638 --> 00:14:59,688
Here's some basics.
350
00:15:00,948 --> 00:15:05,328
The IRS generally lets the parent whom
the children live with most of the
351
00:15:05,328 --> 00:15:07,488
year claim, the major tax benefits.
352
00:15:07,698 --> 00:15:09,168
It's what they call the custodial parent.
353
00:15:09,948 --> 00:15:13,998
So if the kids live with you, More
than they live with the other party.
354
00:15:15,108 --> 00:15:17,808
That's what the IRS would call
the custodial parent presumption.
355
00:15:18,618 --> 00:15:19,518
Why is that important?
356
00:15:20,268 --> 00:15:22,908
Well, as a custodial parent,
you're going to be able to
357
00:15:22,908 --> 00:15:24,438
claim head of household status.
358
00:15:25,398 --> 00:15:27,078
You're going to get the child tax credit.
359
00:15:28,338 --> 00:15:29,328
You're going to get that.
360
00:15:29,958 --> 00:15:31,458
Credit for other dependents.
361
00:15:32,058 --> 00:15:34,458
It's absolutely more
favorable than filing single.
362
00:15:35,418 --> 00:15:36,708
Now there are some exceptions to that.
363
00:15:36,738 --> 00:15:38,178
There's a thing called release of claim.
364
00:15:38,472 --> 00:15:40,512
It could be the custodial parent
can choose their release, their
365
00:15:40,512 --> 00:15:43,572
claim, allowing the non-custodial
parent to gain the tax benefits.
366
00:15:44,232 --> 00:15:47,022
I want to get into the
weeds done on form 83 32.
367
00:15:47,022 --> 00:15:48,402
It's signed by the custodial parent.
368
00:15:49,542 --> 00:15:50,712
Well, why would you do that, Ralph?
369
00:15:50,712 --> 00:15:51,762
what will be the reason for that?
370
00:15:51,762 --> 00:15:55,032
Well, Let's just say you can be amicable.
371
00:15:56,142 --> 00:15:57,672
At times there's an income disparity.
372
00:15:57,672 --> 00:16:00,222
Sometimes it makes financial sense
for the higher earning parent to
373
00:16:00,222 --> 00:16:01,722
claim the kids that just that simple.
374
00:16:03,012 --> 00:16:04,452
I've seen this happen a lot of times.
375
00:16:05,332 --> 00:16:07,822
and you just have a discussion
with your ex and say, listen,
376
00:16:07,822 --> 00:16:08,722
I'll let you claim the kids.
377
00:16:08,722 --> 00:16:11,632
I know you make more than I make, but
they'll throw me a couple of dollars back.
378
00:16:12,322 --> 00:16:13,612
Happens all the time.
379
00:16:13,612 --> 00:16:14,512
This is very common.
380
00:16:15,632 --> 00:16:18,782
tax deductions and credits are more
impactful when your income is higher.
381
00:16:18,782 --> 00:16:21,902
So if you got one parent, let's just
say, for example, You've got one.
382
00:16:21,902 --> 00:16:22,952
Parent is not working now.
383
00:16:22,982 --> 00:16:24,812
They're, they're primarily
taking care of the kids.
384
00:16:25,742 --> 00:16:26,822
And the other parent is working.
385
00:16:28,052 --> 00:16:30,472
And then maybe you have a decision
to see, Joe, Joe and Sally or
386
00:16:30,472 --> 00:16:32,892
Mary, Hey Joe, you claim the
kids, you claim how to household.
387
00:16:33,912 --> 00:16:36,732
But let's split the tax benefit and you,
if you hire somebody like myself, we
388
00:16:36,732 --> 00:16:37,932
can figure out what that tax benefit is.
389
00:16:37,962 --> 00:16:39,252
this is gonna be a negotiating tool.
390
00:16:40,362 --> 00:16:42,462
This can be bargaining power
and a divorce settlement.
391
00:16:42,492 --> 00:16:44,472
So don't automatically give
this away without asking for
392
00:16:44,472 --> 00:16:45,672
concessions in the other areas.
393
00:16:45,672 --> 00:16:46,422
And I'm going to say this.
394
00:16:46,422 --> 00:16:47,562
Be very careful.
395
00:16:48,472 --> 00:16:51,292
I told you to go get an attorney,
but be careful what you do there.
396
00:16:51,292 --> 00:16:52,972
And I'm not saying
attorneys are bad folks.
397
00:16:52,972 --> 00:16:54,082
they have a job to do.
398
00:16:55,162 --> 00:16:58,822
But the truth is in my experience,
the person who makes the most
399
00:16:59,182 --> 00:17:00,562
in a divorce is the attorneys.
400
00:17:01,222 --> 00:17:03,442
So be cautious about if
you can work things out.
401
00:17:03,792 --> 00:17:06,732
in the bounds of, keeping things
real and keeping things legal.
402
00:17:07,272 --> 00:17:07,872
You should do that.
403
00:17:07,872 --> 00:17:09,282
Now, sometimes there's joint custody.
404
00:17:09,282 --> 00:17:10,782
That's when the custody split 50 50.
405
00:17:10,782 --> 00:17:12,252
I see that more and more these days.
406
00:17:12,735 --> 00:17:15,645
Which leaves the IRS with a huge
problem, and they have to figure
407
00:17:15,645 --> 00:17:17,255
out, who gets to claim the children.
408
00:17:17,255 --> 00:17:19,255
Now sometimes it's, I
claim the child issue.
409
00:17:19,255 --> 00:17:20,755
You claim the child
next year, that happens.
410
00:17:21,032 --> 00:17:23,282
and none of this really
impacts child support.
411
00:17:23,282 --> 00:17:24,122
So don't worry about that.
412
00:17:24,122 --> 00:17:25,202
That's not a big part of that.
413
00:17:25,202 --> 00:17:26,342
the fine print is this.
414
00:17:27,392 --> 00:17:29,222
You can release that claim,
but not right directly.
415
00:17:29,282 --> 00:17:32,962
So as the custodial parent didn't,
if he didn't file that form 83 30,
416
00:17:32,962 --> 00:17:35,642
2 of the non-custodial parents tax
return, you can't fix that later.
417
00:17:35,912 --> 00:17:38,702
Claim sticks with you, but
the truth is from a practical.
418
00:17:39,032 --> 00:17:39,872
Side of this.
419
00:17:40,772 --> 00:17:44,842
If you can have an amicable discussion
and say, listen, you claim the one this
420
00:17:44,842 --> 00:17:46,462
year, you claim the children next year.
421
00:17:46,552 --> 00:17:49,702
As long as two people aren't claiming the
same child is never going to be issue.
422
00:17:49,702 --> 00:17:50,512
Now that said.
423
00:17:50,755 --> 00:17:54,475
I've dealt with many situations where
both parties tried to claim the kids
424
00:17:54,475 --> 00:17:58,975
and it becomes a contest of seeing
who can get to the filing first.
425
00:17:59,272 --> 00:18:00,352
So don't let that happen.
426
00:18:00,352 --> 00:18:02,332
have a discussion, talk about this.
427
00:18:02,642 --> 00:18:05,552
there's so many things that
can be resolved in this.
428
00:18:05,552 --> 00:18:08,102
If you'll sit down and just have
a conversation, and this leads me
429
00:18:08,102 --> 00:18:09,752
back to a few final action steps.
430
00:18:10,532 --> 00:18:11,582
And that's a document.
431
00:18:11,582 --> 00:18:12,152
Everything.
432
00:18:12,588 --> 00:18:15,258
In this situation where you're
trying to figure out who's going to
433
00:18:15,258 --> 00:18:17,058
claim somebody and it becomes ugly.
434
00:18:17,058 --> 00:18:18,888
And you're going to have to
battle this out with the IRS.
435
00:18:18,888 --> 00:18:21,558
you've got to prove the exact number
of nights that children live with.
436
00:18:21,558 --> 00:18:21,768
You.
437
00:18:22,788 --> 00:18:25,788
If the custody is 50, 50, or close,
this matters greatly and the IRS.
438
00:18:25,818 --> 00:18:27,048
so basically here's the way it plays out.
439
00:18:28,278 --> 00:18:31,248
Parent a comes in, gets their
taxes done and claims the children.
440
00:18:31,722 --> 00:18:33,012
If they file electronically.
441
00:18:33,012 --> 00:18:33,492
It's great.
442
00:18:33,492 --> 00:18:34,152
It goes right through.
443
00:18:35,982 --> 00:18:38,622
I would say a couple of weeks later,
parent B comes in and get their taxes.
444
00:18:38,622 --> 00:18:40,392
done immediately come to
the same person, but they go
445
00:18:40,392 --> 00:18:41,532
somewhere, get their taxes done.
446
00:18:42,762 --> 00:18:44,352
And they tell their tax advisor account.
447
00:18:44,382 --> 00:18:45,552
No, I'm going to claim the kids.
448
00:18:46,422 --> 00:18:47,622
And let's say they file electronically.
449
00:18:47,832 --> 00:18:49,932
Then what happens is they filed
that return electronically.
450
00:18:49,932 --> 00:18:50,802
it gets rejected.
451
00:18:51,522 --> 00:18:53,292
The IRS says whoa, wait a second now.
452
00:18:54,102 --> 00:18:55,662
Someone's already claimed these children.
453
00:18:56,682 --> 00:18:58,602
So you get that call
from your tax advisor.
454
00:18:58,602 --> 00:18:59,742
It says, oh, you know what?
455
00:18:59,742 --> 00:19:00,042
Mrs.
456
00:19:00,042 --> 00:19:02,432
Jones, We tried to fail
your return electronically.
457
00:19:02,432 --> 00:19:04,442
And all of a sudden it got
rejected because someone else
458
00:19:04,442 --> 00:19:05,132
has claimed her children.
459
00:19:05,162 --> 00:19:07,112
And then of course,
then the battle starts.
460
00:19:07,622 --> 00:19:08,942
Oh that no good.
461
00:19:08,942 --> 00:19:09,422
You know?
462
00:19:10,322 --> 00:19:12,152
I can't believe he did
that, or she did that.
463
00:19:12,578 --> 00:19:13,868
But then you got to document this.
464
00:19:13,868 --> 00:19:16,248
So what you're going to end up doing
from a practical standpoint, you're going
465
00:19:16,248 --> 00:19:18,668
to paper file your return, which means
you're gonna be waiting for a refund.
466
00:19:18,668 --> 00:19:19,448
If you're getting one.
467
00:19:20,738 --> 00:19:23,618
And eventually you're going to get
this letter from the IRS that says,
468
00:19:23,618 --> 00:19:25,338
Hey guys, we see you both claimed.
469
00:19:25,358 --> 00:19:26,948
These choose the same child.
470
00:19:26,948 --> 00:19:28,178
Let's prove this.
471
00:19:29,348 --> 00:19:33,488
That's why I'm saying the negotiation to
this is so much easier, but if you can't
472
00:19:33,488 --> 00:19:36,688
negotiate, then document everything,
Get a calendar out and figure out,
473
00:19:36,718 --> 00:19:38,668
which nights the children were with you.
474
00:19:39,148 --> 00:19:40,498
What expenses you are pay for?
475
00:19:40,528 --> 00:19:42,538
And people ask me all the time,
do they really want receipts?
476
00:19:42,538 --> 00:19:42,778
Yes.
477
00:19:42,778 --> 00:19:43,648
They really want receipt.
478
00:19:43,678 --> 00:19:45,268
You're going to have
to prove grocery bills.
479
00:19:45,268 --> 00:19:47,398
You're going to have to
prove clothing bills.
480
00:19:47,398 --> 00:19:48,898
You've got to prove all those things.
481
00:19:48,898 --> 00:19:50,308
So keep track of those expenses.
482
00:19:50,338 --> 00:19:51,598
I know it's a huge burden.
483
00:19:52,228 --> 00:19:53,788
But it's going to pay off in the end.
484
00:19:53,788 --> 00:19:54,868
So the key to this.
485
00:19:55,378 --> 00:19:58,168
Is making sure that you
document everything.
486
00:19:58,768 --> 00:19:59,668
Now we've covered a lot.
487
00:19:59,698 --> 00:20:00,508
Let me just do this.
488
00:20:00,508 --> 00:20:04,828
Let me take a few moments and just, We got
a couple emails from clients or people who
489
00:20:04,828 --> 00:20:06,148
listened to the show and they said this.
490
00:20:06,148 --> 00:20:06,958
So Sarah writes.
491
00:20:07,618 --> 00:20:11,428
My husband insists on keeping the house,
but I can't afford the mortgage alone.
492
00:20:11,428 --> 00:20:12,178
Am I stuck?
493
00:20:12,808 --> 00:20:14,398
Well, Sarah, we kind of talked about this.
494
00:20:15,058 --> 00:20:17,248
But you got to look at the
numbers, not your emotions.
495
00:20:17,622 --> 00:20:19,452
Ask yourself, a couple of
questions, can the house be
496
00:20:19,452 --> 00:20:20,682
refinanced under just your name?
497
00:20:20,712 --> 00:20:21,522
We talked about that.
498
00:20:22,482 --> 00:20:25,785
Could selling it and buying something
smaller, be the wiser long-term, maybe
499
00:20:25,785 --> 00:20:28,275
you make a clean split, you sell
and, each of you by your own homes.
500
00:20:29,115 --> 00:20:31,665
But don't be afraid to ask for
temporary support from the family.
501
00:20:31,725 --> 00:20:34,665
if it bridges a gap to financial
freedom, ask for help from your
502
00:20:34,665 --> 00:20:37,725
parents, ask for people around you
to get you through that tough time.
503
00:20:38,445 --> 00:20:41,175
You got to avoid letting fear,
push you into a solution that traps
504
00:20:41,175 --> 00:20:42,585
you for years to come, don't make.
505
00:20:43,765 --> 00:20:44,905
short-term decision.
506
00:20:44,935 --> 00:20:46,945
That's going to have
long-term consequences.
507
00:20:47,545 --> 00:20:48,895
We got another email from mark.
508
00:20:48,925 --> 00:20:49,795
He says my soon.
509
00:20:49,872 --> 00:20:52,152
X, two B as he calls it, hides her income.
510
00:20:52,422 --> 00:20:53,742
How do I get a fair settlement?
511
00:20:53,772 --> 00:20:54,912
If she's lying about earnings?
512
00:20:54,942 --> 00:20:57,732
Well, Mark this happens, dude.
513
00:20:57,762 --> 00:20:58,632
It's the truth.
514
00:20:59,542 --> 00:21:02,392
if you've got an attorney or your
attorney might consider hiring a forensic
515
00:21:02,392 --> 00:21:04,072
accountant, done some of that work.
516
00:21:04,612 --> 00:21:08,182
You think of them as financial detectives,
they can track down hidden assets.
517
00:21:08,912 --> 00:21:11,102
not everybody's honest,
mark, that's just the truth.
518
00:21:12,032 --> 00:21:15,662
It's an expense to hire somebody like
this, but it could save you vastly more.
519
00:21:16,382 --> 00:21:19,122
If it prevents you from being
cheated, it's overwhelming.
520
00:21:20,052 --> 00:21:23,982
Finances during divorce feel like a
double burden, but knowledge is power.
521
00:21:24,792 --> 00:21:27,432
Surround yourself with wise
counsel, both legally and
522
00:21:27,432 --> 00:21:28,902
financially cling to your faith.
523
00:21:28,902 --> 00:21:31,782
this is going to be a time when
your faith is going to be tested.
524
00:21:32,862 --> 00:21:35,952
It's a time when, if you make
your faith strong, it will work.
525
00:21:35,952 --> 00:21:37,452
You'll be able to rebuild.
526
00:21:38,322 --> 00:21:40,362
Even if it doesn't look the way
you pictured it at the time.
527
00:21:40,708 --> 00:21:41,968
You can persevere.
528
00:21:42,748 --> 00:21:44,428
Now I know we've covered
a great deal today.
529
00:21:45,208 --> 00:21:48,808
I'm going to encourage you to go to
askralphpodcast.com and share your story.
530
00:21:49,438 --> 00:21:51,658
It might be just the
encouragement someone else needs.
531
00:21:51,658 --> 00:21:53,728
And while you're there, make
sure you join our email list.
532
00:21:54,358 --> 00:21:57,778
We're doing a $25 Amazon gift
card giveaway every week.
533
00:21:58,588 --> 00:22:00,118
You can also schedule a consultation.
534
00:22:00,118 --> 00:22:00,838
Me, like we talked about.
535
00:22:00,868 --> 00:22:02,998
If you need somebody to help
you on the financial side of
536
00:22:02,998 --> 00:22:03,958
this, I'm not an attorney.
537
00:22:03,958 --> 00:22:05,158
I don't give legal advice.
538
00:22:05,698 --> 00:22:08,868
But I can certainly help you on the
financial side of this, Help you navigate
539
00:22:08,868 --> 00:22:11,818
the tax consequence, help you create
a new budget, that sort of thing.
540
00:22:12,398 --> 00:22:15,548
share this episode with others who
might be going through a divorce.
541
00:22:16,468 --> 00:22:18,848
Encouraed them to reach out to me
if they need further assistance.
542
00:22:18,928 --> 00:22:21,478
I look at my mission here to help others.
543
00:22:22,138 --> 00:22:23,428
This is a difficult topic.
544
00:22:23,428 --> 00:22:25,678
You can tell by my tone of
voice, that this is not an easy
545
00:22:25,678 --> 00:22:28,048
thing to talk about, but it's
something we needed to talk about.
546
00:22:28,978 --> 00:22:31,108
So I hope this has been
encouraging for you.
547
00:22:31,558 --> 00:22:33,928
I hope it's giving you practical advice.
548
00:22:33,928 --> 00:22:35,518
And if it has share it with somebody.
549
00:22:36,008 --> 00:22:38,768
my goal is to grow audience so
that I can help more people.
550
00:22:39,338 --> 00:22:41,858
So tell somebody, tell a
friend, tell a family member.
551
00:22:42,518 --> 00:22:46,268
And remember folks, as I always
say, stay financially savvy.
552
00:22:46,808 --> 00:22:50,018
And during these difficult times,
may God bless you abundantly.
553
00:22:50,558 --> 00:22:52,448
You will persevere.
554
00:22:52,838 --> 00:22:54,938
You will see a new season in your life.
